Viewed from outside the province, British Columbia has assets few large-scale, energy exporters can offer.

A stable democracy. A trans-parent set of rules for conducting business. Solid, reliable infrastructure.

But B.C. still has some big issues to resolve.

At a recent Business Council of British Columbia forum on the province's future energy opportunities, some leading voices in the sector were advised that environmental and labour issues are lingering impediments.

Potentially big, long-term customers such as Japan are watching, as are longtime players in the B.C. natural gas sector.

According to a recent report from the International Energy Agency, the anxiety in Japan and Europe about the reliability of nuclear power - triggered by the catastrophic earthquake, tsunami and nuclear power plant meltdown in Fukushima in 2011 - will give gas greater prominence as a fuel for electricity generation.

With the global trade balance "visibly shifting to Asia," the IEA noted, LNG trade is increasing faster than global gas demand and the bulk of that trade is with "hungry Asian markets."

The IEA foresees global LNG trade accelerating in 2015, with a new wave of production from LNG projects still underway in Australia and the U.S.

B.C. has a chance to make a big splash in that market. Canada is ranked by the IEA as the developed world's second-largest gas producer and - while it may not catch up to the United States, which is four times as productive - it has an opportunity through development of unconventional gas resources in northeast B.C. to leave potential rivals such as Nor-way, the Netherlands, Mexico and Australia in the dust.

But B.C. will need to find a way to deliver to coastal cities, including Kitimat, an estimated 9,000 construction and 800 full-time workers who will be needed to build and operate at least two major LNG processing plants and potentially four others in the coming years.

The industry also needs to prove it can attract and hang onto the field and plant workers needed to explore for, drill for, recover, process and pipe that gas from the northeast to the Pacific coast at Kitimat, thus assuring LNG plants of the gas they need to sustain their operation.

JAPAN BECKONS

At the business council forum and later in an interview with The Vancouver Sun, Shinya Miyazaki, the Calgary-based CEO of Mitsubishi Corp. subsidiary Diamond Gas Management Canada, said there are about 15 significant LNG exporting countries and Japan is importing from nine of those countries on a long-term contract basis.

Many other countries may be LNG exporters in the future.

"Among those countries, we think Canada, particularly the west coast of Canada, is one of the most prospective [jurisdictions] to export LNG in the future because of many positive factors such as huge resources available and very close geophysical location to Asian market ... a very well functioning natural gas market and infrastructure, and a superior investment climate," Miyazaki said.

Looking at "government, industry, stakeholders and society in general [in] British Columbia and Canada, we see very good, mature policy and regulations in favour of development of natural gas and LNG export, and a very advanced and sophisticated industry that can support a big project, and very healthy and transparent relations among stakeholders, and very high standard of society, including education, economy and infrastructure."

Nonetheless, he added: "The environmental impact has to be very carefully managed, and a very skilled workforce is always required throughout the project phases."

The Japanese government is in the midst of a review of its nuclear power sector, and as part of that process, 54 reactors are offline including 14 directly damaged by the earthquake and tsunami.

"Depending on the scenario there, from zero nuclear policy to the maximum available nuclear policy, and also the choosing of alternative energies, LNG demand in Japan will vary very much."

N o n e t h e l e s s , M i y a z a k i added, "we're still expecting LNG [imports] to Japan will be more than 2011 and 2012, even under the moderately positive scenario for nuclear energy."

Mitsubishi has been involved one way or another with LNG for several decades but it was only in 2010, first through a partnership with Penn West Exploration and then with Encana Corp., that it began investing in Canadian shale gas development.

"We are investing billions of dollars," Miyazaki said.

The company is also involved in an LNG partnership at Kiti-mat with Shell.

"For the production of gas probably you need lots of people, working on the rig and other areas for a long time, 20-30 years, longer than that," Miyazaki said.

"For the LNG plant or pipe-line, probably we need several thousands of people but that will be for several years, not for 30."

LABOUR ISSUE

Richard Dunn, vice-president of regulatory and government relations for Encana's Canadian division, says the Calgary-based company is already in a struggle to hang onto skilled workers in the Canadian West. Dunn cites EnCana's Cabin gas plant project at Horn River as an example of the challenges the sector could face as it scrambles for workers to sup-port an estimated $20 billion to $40 billion worth of infrastructure to support LNG exports.

"There has been significant competition for labour between this [Cabin] project and likely projects in Fort McMurray. On some of our skilled trades, the turnover is in the range of 25-30 per cent a month," Dunn says.

The situation is pushing up the cost of the Cabin project, says Dunn, who adds that "this turnover is resulting in lower productivity."

He believes B.C., Alberta and other Canadian provinces need to work together to find a solution before the competition for labour threatens huge cost overruns for LNG projects.

"It's already a challenge, in today's environment. It just seems to me there are going to be all kinds of opportunities for young people in Canada, first nations, local opportunities. I know the government is looking at training opportunities, but with the extent of labour demands in front of us it's hard to believe that there doesn't have to be some sort of inter-national solution as well.

"This is something that the provinces have to collectively be looking at or ... you are competing against one another and all you are doing is driving up labour rates to the point that projects are uncompetitive."

ssimpson@vancouversun.com Twitter @ScottSimpsun

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